28,000 To Lose Jobs As Wards Gives Up

Disappointing Holiday Season Sales Lead Ge To Shut Down Chain

Outmatched by feistier competitors on all sides, Montgomery Ward & Co., one of the nation's oldest retailers and a venerable Chicago institution, reached the end of the line Thursday.

Wards, which struggled to regain its footing after a 1997 bankruptcy filing, announced it will liquidate its 250-store chain after a disappointing Christmas selling season. The decision was made by Wards' parent, General Electric Co., which ran out of patience with the stores' losses.

The closure will cost 28,000 Wards workers their jobs over the next few months, including about 1,000 corporate employees at the company's headquarters tower at 535 W. Chicago Ave. Some 450 of those headquarters jobs were eliminated immediately, and many employees boxed up their personal possessions and left the office for the last time Thursday.

Wards' customers greeted the news with shock. "They just remodeled the whole store," said Loretta Whalen, 65, who was shopping for a freezer at Wards in the Ford City mall Thursday, one of 18 Wards locations in the Chicago area.

"It's terrible," added her husband, Mike Whalen. "A lot of employees will lose their jobs. This hurts the economy."

Nearby in the coat section, Georgia Griffin recalled how her son was raised in Wards clothing. "I've shopped for all of my children here," said the 74-year-old grandmother. "I just keep coming back."

Wards stores will remain open over the next few months while going-out-of-business sales are conducted.

Though the swiftness of Wards' demise came as a shock to many customers and employees, the company's fate did not surprise retail experts.

"This had to come eventually. The company has not been able to turn itself around," said George Whalin, president of Retail Management Consultants in San Marcos, Calif. "GE has dumped all this money into Wards, and they're still not a relevant retailer."

As part of an orderly liquidation, Wards filed Thursday for protection from creditors under Chapter 11 of the bankruptcy code in Delaware Bankruptcy Court. But the company made no pretense that it might reorganize its business a second time. During the next several months, Wards said it will close all of its stores, which are scattered among 30 states, and 10 distribution centers around the country.

Wards Chief Executive Roger Goddu called the ending to Wards' 128-year saga "unavoidable." Closing the retail chain was a last resort, he said, chosen only after "weak holiday sales and a very difficult retail environment simply did not permit us to complete the turnaround that might have been possible in an otherwise thriving economy."

Goddu did not address employees personally Thursday, leaving many to hear about the liquidation from customers or from news reports. One omen of the news: Wards' warehouses began refusing deliveries of new goods on Wednesday.

Many retail experts doubt Goddu and his team ever had much of a chance to rescue Wards, which was once counted among the country's largest retailers of mattresses, home appliances and consumer electronics.

By the time Goddu, a former Toys "R" Us executive, arrived at Wards in early 1997, the retailer was losing millions of dollars a year, hampered by unattractive, cluttered stores and stodgy merchandise. A Chapter 11 bankruptcy filing seven months later only complicated the situation because many of Wards' suppliers were reluctant to extend more credit when they hadn't been paid.

The biggest problem the company faced wasn't an internal one. More agile retailers such as Wal-Mart Stores Inc., Target Corp. and Kohl's Corp. were winning away Wards' former customers with improved apparel offerings at better prices.

The fast growth of Old Navy, a discount version of Gap Inc.'s casual clothing chain, also hurt Wards. Somehow Old Navy found a way to make buying inexpensive clothes hip, a trick that Wards with its outdated image couldn't pull off.

At the same time, Wards' closest competitors--Sears, Roebuck and Co. and J.C. Penney Co.--were under pressure themselves, forcing them to cut prices more often. The niche between Wal-Mart and Sears that Goddu wanted Wards to fill just wasn't there, retail experts say.

As long as the economy was chugging along at a healthy pace, Wards was able to survive. It even made a little progress in 1998 and 1999, bringing in trendier clothing and furniture, which was shown off to advantage in more than 70 remodeled stores.

Those spiffed-up stores boasted brighter lighting and sleek pear-wood frames to draw attention to the season's hot fashions. Customers responded, and monthly sales at remodeled stores increased by 20 percent or more. That gave Goddu a comeback story that he could tell his bosses at GE and Wards' suppliers.